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K. Lloyd Billingsley - Contributor
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K. Lloyd Billingsley is Editorial Director for the Pacific Research Institute and has been widely published on topics including on popular culture, defense policy, education reform, and many other current policy issues. [go to Billingsley index]

Disable Pension Fraud
Enable a Defined-Contribution System...
[K. Lloyd Billingsley] 1/17/05

In his address last week, Governor Arnold Schwarzenegger called for a 401(k) style defined-contribution pension system for state workers. In a January 24 hearing on pension issues, state legislators should consider the evidence for why such a system is necessary. Lucrative disability pensions are becoming the rule rather than the exception in some counties.

A disability pension is 50-percent tax free and provides half the employee's salary for life and up to 100 percent for the employee's spouse if the employee dies. In L.A. County alone, according to a January 3 Los Angeles Daily News report, about 1,200 former county employees draw yearly pensions of $100,000 or more and 10 draw from $210,434 (together more than $2.1 million a year) to $316,047 annually, nearly $1 million in three years for a single person. Such rich benefits set strong incentives and, to judge by the numbers, disability pensions are easy to get.

In 2002, 85 percent of L.A. county's firefighters grabbed disability pensions, according to the Daily News. Over the past decade, an average of 79 percent of L.A. County firefighters were granted disability pensions. A full 56 percent of L.A. County sheriff's employees were also granted such pensions, the high point coming in 1994 at 67 percent, more than two thirds. These numbers vie with the California Highway Patrol.

In 2002, according to the Daily News report, 82 percent of CHP officers took disability pensions and, historically, 67 percent of the force retires in that way. But some disabled retirees show an astonishing ability to perform such strenuous and stressful jobs as scuba instructor, deputy sheriff of Yolo county, and director of security at San Francisco airport.

Only a statewide case-by-case review will tell how many disability retirements are bogus but certainly a great many are, perhaps the majority. Legislators must ignore protests from apologists of the system and address this problem. They should bear in mind that salaries and pensions for government employees in California are already generous. CHP employees, for example, may retire at 50 with 90 percent of their salary for life.

If any disability claim turns out to be false, that should be fraud under the law. The pension should be revoked and charges filed. Legislators should also take a hard look at the doctors who approve disabilities claims that turn out to be bogus. Such approval is malpractice and should be grounds for revocation of a medical license.

All disabilities should be completely work related and legitimate. Medical science, not psycho-babble, should be the rule. An L.A. county firefighter, for example, sought a disability for his "phobia" about entering burning buildings. What this person needs is not a disability pension but a different job. The role of attorneys is also worthy of review and the secrecy surrounding the system needs to be dispelled.

These are not "personnel" matters, as stonewalling bureaucrats and strident union bosses claim, to be shielded from taxpayers, the press, and policymakers. They are issues of compelling public and law enforcement interest. Legislators must let the sun shine in.

They also need to disable a ludicrously lenient system that rewards fraud and insults both taxpayers and the genuinely disabled. To solve California's long-term pension problem, legislators should aim for a defined-contribution 401(k) style system for state workers. CRO

copyright 2005 Pacific Research Institute




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